Attorney Sued For Failing To Raise A Meritless Defense of Criminal Usury Wins Dismissal

On April 26, 2023, a New York appellate court covering Suffolk County upheld the pre-answer dismissal of a legal malpractice suit. A disgruntled client in a commercial mortgage foreclosure action had his legal malpractice claim dismissed at the outset of litigation because his claim was wrong on the law and facts. The attorney defending the legal malpractice action had represented the client for six months in the foreclosure action at the time he withdrew from representing the client. The client retained new counsel and the property was sold for $2.5M of which $1.3M was paid to the lender which resolved the foreclosure.

The legal malpractice claim was founded on a mistaken belief that the court in the foreclosure action would have ruled in the client's favor had the affirmative defense of criminal usury been asserted by the first attorney. The interest rate on the loan would increase from 6.5% to 24% only in the event of a default - but contrary to the claim, it did not increase to 30.5% which would constitute criminal usury.  The Appellate Division, Second Department explained: "...the evidence indisputably demonstrated that the annual interest rate imposed under the loan documents was 6.5% and, therefore, was not criminally usurious. Moreover, contrary to plaintiff's contention, the defense of usury does not apply where the terms of the note impose a rate of interest in excess of the statutory maximum only after default or maturity." Bono v Stim & Warmuth, PC, 2023 N.Y. Slip Op. 02099

Practice Lesson: This litigation started when the attorney sued his former client in Small Claims Court for outstanding fees of $2163.00 which resulted in a counterclaim of legal malpractice. The case was then removed to Supreme Court with the likely expenditure of tens of thousands of dollars to dismiss the retaliatory legal malpractice.

Ronald C. Burke, Esq

Trial Attorney with 30+ Years of Experience Attorney Ronald C. Burke, Esq. has more than 30 years of experience and has focused his career on representing clients in cases involving personal injury, medical malpractice and legal malpractice. He is a seasoned trial lawyer and has won many seven-figure settlements and verdicts for his clients over the years, including many case victories listed among the largest in the history of the New York State. He has been featured in the news and is a regular lecturer for the New York County Lawyers Association, as well as having lectured before the New York State Bar Association. Ron is also an attorney with Kelner & Kelner, a New York personal injury law firm. Awards and Accolades Mr. Burke's awards and accolades are many. Among them, he has been included in New York Super Lawyers® each year since 2010, and he has received the highest-possible AV® Rating from Martindale-Hubbell®. Verdict Search, a part of the New York Law Journal, frequently recognizes his notable successes after winning some of the highest settlements and verdicts in past years. He was also featured in their list of the "Top New York Verdicts " and "Top New York Settlements." He is a member of the New York State Bar Association and is licensed to practice law in the U.S. District Court for the Southern and Eastern Districts of New York, as well as before the United States Supreme Court. When Attorney Burke is not handling legal malpractice cases, he is highly involved in the local community. He was a member of the Village of Rockville Centre Volunteer Fire Department, has served on the local school board and as Chairman of the local Zoning Board. Learn more about Attorney Burke and how he can skillfully handle your malpractice case by contacting the Law Offices of Ronald C. Burke, Esq. right away to schedule your complimentary case evaluation. Our firm is here to help! Contact a New York Legal Malpractice Attorney Our firm provides each client's case with thorough preparation and aggressive representation, ensuring that you win the best possible results for your case whether it is settled or goes to trial. As a seasoned trial lawyer, Mr. Burke can provide the strong and relentless representation you need to establish negligence in a legal malpractice case and to recover any damages you may have suffered. Our firm can recover compensation for pre-trial and trial malpractice, violations of fee arrangements, loss of income, pain and suffering, and much more. Contact us today!


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Go to Top